The Money Files

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A blog that looks at all aspects of project and program finances from budgets and accounting to getting a pay rise and managing contracts.

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Project Budgeting in 60 seconds

How to demo your project deliverables

Project Cost Management: An Overview

What you need to know about your project supplier

In Memoriam: Wilhelm Kross

Project Budgeting in 60 seconds

Categories: video

Posted on: October 30, 2014 09:29 AM | Permalink | Comments (0)

How to demo your project deliverables

Categories: tips

Demos and prototypes save your project time and money because you can get early feedback. I’ve talked about that before (in this video) but a couple of people have asked me for some more tips around setting up demos. And I’m very happy to oblige.

Let’s get on with it then, shall we?

The demo environment

Pick a nice room. By that I mean one that is large enough to fit everyone in comfortably and that’s got enough power sockets. Everyone brings a device along these days and they all need plugging in.

Understand the room’s heating and lighting controls. You don’t want people getting fidgety because they forgot their jacket – you want them concentrating on your amazing project deliverable.

If you are doing your demo via a web conference, get the software set up well before you expect everyone else to join the call. Test your microphone and headset and make sure you can share control of the screen with your co-presenters, if you have any.

Set expectations

Manage the expectations of the people in the room. Are you showing them a very rough outline of a product, a prototype that doesn’t quite work properly yet, a feature-rich almost-finished product, or the final thing? Set their expectations around what they are going to see so they aren’t disappointed when features don’t work or when you tell them it’s too late to change the colour because you’ve already ordered 30,000 in blue.

Review your objectives

What is it that you want people to get out of this demo? You can organise a demo or show people a prototype for a number of reasons such as:

  • To get buy in for your proposal
  • To ensure you are on the right track
  • To get feedback
  • To confirm your understanding of requirements
  • To keep your stakeholders engaged on the project
  • To show someone a finished product prior to delivering testing on how to use it.

Think carefully about why you want to do this demo and what outputs you are expecting. Do your demo attendees have the same understanding as you? It’s worth running through the objectives at the start of the meeting, just in case they don’t.

Get organised

Practice, practice, practice. A complete dry run is a good idea. You want your audience to notice what you are saying, not get cut off halfway through your web conference because you don’t know how to use the meeting controls.

Walk through the demo in preparation, whether you are doing it in front of a ‘live’ audience or via a computer screen.

Prepare for questions

Be ready to answer questions. You are showing them your project deliverable in anticipation of some kind of feedback so expect them to have questions about what it does, how it does that and what else it could do. Be prepared to manage the ‘wouldn’t it be great if…’ type questions if you aren’t able to consider any modifications at this point.

Provide back up materials

Your demo attendees will hopefully be so excited about what you have built that they will want to share it with their teams. Have some materials ready so that they can do that: screenshots or handouts are great, but a test login (if software) or samples (if something else) and details of how to use it are better.

This gives them the chance to play with what you have created and if you want further feedback, let them know that you are open to their ideas and provide details of how to get them to you – direct contact, via an online request form or so on.

Demos and prototypes are a really powerful tool, especially if you are delivering a software product or a tangible item. End users particularly find this sort of workshop or meeting a very valuable session as they can see what they are getting. In my experience, showing someone a demo of your product helps build engagement too, as they start to get excited and they can see the idea become real.

However, make sure that if you are doing a demo that you are in a position to comment about when they are likely to get to access the final deliverable. There’s nothing worse than seeing a demo and getting excited about the project only to be told, or you can’t have it for 18 months. Set expectations carefully!

How have you used prototypes and demos? Let us know in the comments.

 

Elizabeth Harrin also blogs at A Girl’s Guide to Project Management.

Posted on: October 11, 2014 06:12 AM | Permalink | Comments (0)

Project Cost Management: An Overview

Categories: cost management

Project cost management is an important part of managing a project: A Guide to the Project Management Body of Knowledge – Fifth Edition (PMBOK Guide®) devotes over 30 pages to it. But where do you start? It’s a daunting subject because somehow managing money seems much more difficult than managing people or organising tasks, don’t you think? It doesn’t have to be that way and the PMBOK Guide actually gives you some straightforward approaches to making it easier.

For a start, project cost management the whole purpose of it – the reason why we bother with cost management at all – isn’t rocket science. It’s so that the project can be completed within the approved budget.

It is, however, wider than just budgeting. Cost management involves planning how you’ll spend the money, estimating, getting the financing, finding funding, managing and controlling the costs and of course budgeting too.

Let’s take a look.

Project Cost Management Processes

There are four processes covering cost management in the PMBOK Guide. They are:

1. Plan Cost Management

This is the process of working out how you are going to do your financial management. In this process you’ll establish what policies you should adhere to, what company procedures are relevant and set up the documentation for planning, managing, spending and controlling money as it flows in and out of your project (mainly in at the start as you get authority to spend your budget and then pretty much exclusively out – projects are expensive things and don’t normally generate an income of their own during execution).

At the end of this process you’ll have a cost management plan that tells you everything you need to know about managing your project finances. If nothing else, this should give you the confidence that you’re doing the right thing!

2. Estimate Costs

This process involves coming up with the total figure that your project is going to spend. It’s a part of your overall resource estimating – cash, after all, is a resource on your project. People costs might fall into here but people may be considered a different type of ‘cost’ and you may not need to account for them at all. You’ll also get quotes from suppliers and other third parties in this process for anything that your company can’t do itself.

During this process you’ll apply estimating techniques and build up a picture of the cost of individual activities. Weirdly, you don’t add them all together in this process. You have to wait for…

3. Determine Budget

You add up all your estimates here. This process collates all your estimated costs into a total for the whole project. This is also the process where you get authority to spend your money and that gives you an authorised cost baseline. At the end of this process you’ll also know the ‘profile’ for your spending or the run rate: how much money you need for your project at various points. This can be useful if you’re working on a multi-year project as your organisation can split the funding across several financial years and it isn’t tied up in project accounts when it could be put to better use elsewhere.

4. Control costs

Once the project is in full flight, you’ll be spending money and you’ll need some way to monitor and control what’s happening. This process takes the documentation you prepared earlier and puts it into practice. You’ll apply those policies and procedures (such as how you pay invoices) and record what is going on.

If you are doing Earned Value Analysis on your project, this is the step where that kicks in, as a monitoring and control tool.

Personally, I think Estimate Cost and Determine Budget run so closely together on many small projects that it’s hard to see where one ends and the other begins. As with many things in the PMBOK Guide, you’ll have to apply the processes pragmatically so that you don’t end up with too much bureaucracy but you do get adequate control. In fact, the PMBOK Guide does say that there is plenty of continuity between the cost management processes and the only reason they are split out into four separate processes is because they use different tools and techniques. Those tools and techniques might be different enough to make up a separate section in the book, but in reality you are likely to use them together in a budget workshop – so don’t be afraid to merge the different steps together to get the end result you want.

Over the coming weeks I’ll be looking at each of these processes in more detail, and talking more about the tools and techniques involved. In the meantime, leave your project budget process questions in the comments and I’ll make sure to answer them in a future article.

 

Elizabeth Harrin also blogs at A Girl's Guide To Project Management.

Posted on: October 11, 2014 05:53 AM | Permalink | Comments (0)

What you need to know about your project supplier

Categories: procurement

When you are preparing to select a new supplier for your project you want to make sure that they are a good fit for you and your organisation. As well as the cost management aspects of getting a quote and setting up a procurement process to select a vendor, there are some other things to consider when you are making your final choice. These should all be part of your selection criteria – don’t forget that as well as technical requirements for your project you’re also ‘interviewing’ them to gain some confidence that they are actually going to work well with your existing project team.

So what do you need to know about your project supplier? Here are some things to consider.

Solvency

Solvency is important because you want to work with a business that is credible and stable. It’s not fun to be in a situation where you are halfway through a project and you find out that your supplier is on the verge of bankruptcy. Ask your finance or legal team to carry out their standard background checks on the businesses that you are considering working with (they should have access to the information to do this, although they might outsource the checks to a third party).

You’ll get back information about how the company has performed financially and whether or not it is considered a going concern. If you are at all bothered by the results, talk to the supplier. Some things could be explained away but if not, this simple solvency check will help you avoid a lot of problems in the future.

Size of business

How big is the company? It’s a very different experience working with a major multi-national to working with a small design studio that could essentially be one person working from their kitchen. That’s not to say that you shouldn’t engage small and independent firms, but be aware if you are doing so.

Taking on a big contract is also a risk for a small firm. If you decide not to continue to use them (say, after the project has finished) then they will lose a large deal and could potentially struggle. If you do need them for some kind of ongoing support then make this clear.

With a big company you could find the opposite: your project is so small in the grand scheme of things that you don’t get the customer service you expect because they don’t prioritise your problems.

Estimation techniques

Find out how they have prepared their estimates. There should be a list of assumptions somewhere in the proposal document. These should explicitly say if the proposal includes taxes and expenses. Some vendors will also expect per diems for their staff. This is a flat rate to cover the cost of working away from home or on a client site, and is supposed to be used to cover things like lunches, laundry, phone calls and so on. It’s paid directly to the staff member so it is different from expenses and often it’s explicitly excluded from a quoted price.

How do I know? I’ve been caught out with those before.

Working hours

The working hours are particularly relevant if you are working with international partners. They will have different national holidays to you so it’s worth finding out when they are. You can also write into your contract that you expect them to be available on all workings days in your country. Personally I think this is a bit mean and it’s nicer to be able to work around their availability rather than make them skip their local holidays, although I have seen it done.

You might also want to check what hours they are going to be available. While no one would expect the team in New Zealand to stay up all night in case someone calls, it is worth discussing what would happen if there was an urgent problem during your working hours and the overseas office was closed.

Staffing and experience

Talk to them about who is going to be allocated to your project. You’ll want confidence that the consultants they put forward have the relevant experience to be able to complete the work. Everyone, of course, needs to start somewhere and you may find that you also get less experienced contractors allocated to your account. That’s fine, as long as you know they are being adequately supported by more experienced colleagues. You’re paying for someone to do the job and provide expertise in a field that your own company doesn’t have. You’re not paying for someone to learn on the job.

While you are at it, get references of where they have delivered similar projects for other clients. They should be able to evidence the fact that they are experts in this area because that is what you are engaging them for. If they haven’t got a lot of experience in your sector but you still want to use them, talk to them about you can help them build their knowledge quickly.

What else do you consider when selecting and securing a third party to work on your projects? Let us know in the comments.

Posted on: October 11, 2014 05:34 AM | Permalink | Comments (3)

In Memoriam: Wilhelm Kross

Categories: interviews

I was really sorry to read in PMI Today that Wilhelm Kross had passed away. He was kind enough to let me interview him only last year and I was impressed by the depth of his knowledge. His desire to improve things in project management came through really strongly and he was an active member of PMI as well.

He was a well-known and well-respected figure in project management and I know he'll be deeply missed.

 

You can read my interviews about risk management with him here and here.

Posted on: October 02, 2014 03:42 AM | Permalink | Comments (0)
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